Environmental and Urban Economics

In 2015, I co-authored a paper about the consequences of "Buy America" legislation.  Now that I see that President Trump will require "Buy America" (see the pipeline case study) our paper offers some insights about the near future.   For details about "Buy America" click here.  

Our 2015 paper studied public procurement of transit buses.  Such buses are the buses that urbanites (including me on the #8 and #12) ride around cities.   Our puzzle in our paper is that Singapore, China, South Korea, and Japan produce buses that are more fuel efficient than U.S buses and the market price of these buses is 50% lower than the price of U.S buses.

As I read Dr. Krugman's column today, I started to think about "value added" and import tariffs.  Suppose that a pair of sneakers sold in the U.S features the following global supply chain.  The base of the shoe are made in the U.S and then Mexico makes the laces and then the laces and the base are assembled in the U.S to make the final sneaker.

Nathaniel Popper has written a great NY Times piece about the consequences of crowdfunding.  Crowdfunding represents a matching market in which small investors (people like you and me) seek to invest our $ in startups.  The startups make a sales pitch for why they merit your investment and they argue that they can do great things if they could only raise $X million dollars.  Two ideas crossed my mind as I read Popper's piece;

1.

Here are the highlights of the discussion from a recent Brookings Panel on infrastructure investment. Harvard's Larry Summers and Ed Glaeser each made some important points but I side with Glaeser.   Dr. Summers appears to view infrastructure as a Keynesian stimulus that is palatable to Republicans.  I'm not convinced by such convenient political economy arguments.   You can decide by watching the video.

I am listening to Jimi Hendrix and I'm trying to think about predictions I'm willing to make about environmental regulation under President Trump.  Both Don Trump and I both lived in New York City in the early 1970s.  This was a time when Manhattan was dirty, dangerous and disillusioned.   Real estate prices were low.  Don Trump has made huge amounts of $ as Manhattan has become a more livable "green city".

Why should Michigan taxpayers subsidize the University of Michigan if most of its best graduates move to California and New York?   This thought crosses my mind as I read this piece.  This 2001 NBER paper addressed this issue   but the New Geography of Jobs (see Moretti) accentuates this issue even further.

CNN has just published a good piece where I am quoted about pollution exposure inequality in China.   My research on this topic can be found here and here and here.    Consider a large number of people who differ with respect to their income levels.  This income can be spent on various consumption and investment goods.  Consumption goods include cell phones, ice cream, sneakers etc.  Investment goods includes stocks, bonds,doctors visits, dentist visits, paying USC's tuition.

To my surprise, leading academic labor economists are now talking about monopsony in labor markets such that firms have market power in setting wages.  Such models offer a micro-foundation for arguing that there is "worker exploitation" and the transfer of income from labor to capital (see Piketty).

I have several points I want to make;

1.  At a time when progressives want to sharply raise the minimum wage, such political leaders need economists to supply a theory that justifies this policy.

President Obama set in motion a plan that would require that new cars achieve over 50 miles per gallon by the year 2025. The Obama Administration argued that this policy would slow down climate change and would save households $ by reducing their gas expenditures.  If this "free lunch" is true, then why is President Trump likely to oppose this regulation?   You do  not need to be Berry, Levinson or Pakes to answer this question.

Next week, Daxuan Zhao and I will release a new economics paper focused on the role that climate skeptics play in determining how people adapt to climate change.  A key point to note is how our paper differs from the usual New York Times narrative that focuses on the concern that climate change skeptics are inhibiting the U.S Congress from enacting carbon taxes.  In our paper, there is NO GOVERNMENT!

Individuals are consuming goods that contribute to climate change and the world is warming.